Darden sells headquarters for $133M, with lease back

Darden Restaurants has sold its 6-year-old, $152 million corporate headquarters in Orlando and will lease back the property, the company said Wednesday.

The Orlando-based restaurant company sold the 9.5 acre, 1.5-million-square-foot property and building for $133 million to Orlando Garden Property, an affiliate of New York City-based U.S. Realty Advisors, records show.

Darden Restaurants, parent of Olive Garden and LongHorn Steakhouse, plans to remain in the property along with its 1,000 employees, said spokesman Rich Jeffers. Darden signed a 20-year lease on the property with an option to extend that another 30 years.

The property is at the northwest corner of John Young Parkway and Taft Vineland Road in south Orange County.

"It's all part of the strategy to strengthen the business," Jeffers said. "Selling the building and leasing it back from the new owner provides us with a better way to utilize our capital to further strengthen the business and drive shareholder value."

Darden is in the midst of selling about 500 of its properties, including the spin-off of 424 sites into a real estate investment trust. It has also put another 64 restaurant properties on the market.

Darden CEO Gene Lee said he hopes to use proceeds from its property sales to pay down about $1 billion in debt.

Even though Darden sold the property for less than it built it for, the sale price is misleading because the company also negotiated a lease, said Joshua Harris, a professor at the University of Central Florida's Dr. P. Phillips Institute for Research and Education in Real Estate.

"That is cash they can use for anything to pay off debt to build new restaurants," Harris said. "It's a way to raise capital."

Orange County contributed about $18.3 million in incentives when the headquarters was built in road and infrastructure improvements. The sale had no effect on any government incentives, Jeffers said.